by Emmanuel Joseph
Government’s effort at collecting millions of dollars in tax revenue is experiencing a major setback.
Comptroller of Customs Frank Holder has informed Barbados TODAY that the under-invoicing of imported goods had reached epidemic proportions.
I would say the main challenge that we face is under-invoicing. It is now epidemic,” Holder declared.
“Almost every declaration that you (Customs) look at, you can find there is something wrong with it. It is not only in used cars, it is also in cosmetics and a whole range of goods, that you find that people are under-invoicing.”
The top Government official said some importers seemed to be comfortable declaring a much lower value on their goods in order to avoid having to pay the high duties, even though they were “robbing” the Treasury of much-needed revenue to help run the country.
“It’s all types of goods,” he added. “People now find it easier to, as long as there is a high rate of duty on the article, … under-invoice.”
The Comptroller of Customs cited the used car business as one example where importers were declaring the value of their vehicles to be at least half of what they really were, so as not to pay the high port charges.
“In 2012, Japan reported that they sent used vehicles to Barbados with a value of $68,991,901, and then you had Barbados declaring, what came through Customs as some $37,401,709 in vehicles,” Holder disclosed.
“So you can see right away in Barbados that the amount declared was half of what is coming from Japan; and the rate of duty on cars is 200 per cent or more,” the senior public servant reported.
He argued that considering the substantial amount of revenue being lost, there was urgent need to “arrest” this state of affairs. The Government official promised his department would now be taking off the “kid gloves” where it previously allowed offenders time to pay the difference, and would be prosecuting them.
“When persons declare cars for duty-free purposes,” Holder reported, “you look at the value of them, and then you look at the value of the same cars that are not for duty-free purposes and you see a vast difference.
“For example, there are cars coming into the island where people are declaring the value at US$3,000, US$5,000 and US$9,000; and those cars are valued at some US$60,000 (and) US$70,000, (real value out of Japan) and you can see the big difference there.
“So you can see the big difference in what is being declared and what the real value should be; and that’s a tremendous loss to the revenue if it is allowed to continue. And we will be making an effort to make sure that it does not continue; and eventually, we think we will have to take some legal action against the people who continue under-invoice,” Holder warned.
Without spelling out details, he told Barbados TODAY his agency had reaped some successes with respect to under-invoicing in the cosmetics and used car businesses, and would continue to fight unscrupulous importers.
“We will continue to address the matter until we reduce the incidence of under-invoicing,” he assured.
Holder reported that individuals were also involved in the practice, and drew attention the freight out of Japan to further illustrate the level of devaluation of vehicles by importers.
“If you look at the freight out of Japan, for example, [it] is US$2,000, so when you try to take that US$2,000 as freight from a car for $3,000, it means the car is only valued at $1,000; which is ridiculous,” exclaimed Holder.
While figures were not available, the Comptroller of Customs said substantial sums of money had so far been recovered from businesses guilty of under valuing their imported items.